v3.25.1
Note I - Income Taxes
 9 Months Ended
Mar. 28, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

I.

Income Taxes

 

Accounting policies for interim reporting require the Company to adjust its effective tax rate each quarter to be consistent with the estimated Annual Effective Tax Rate (AETR). Under this effective tax rate methodology, the Company applies an estimated annual income tax rate to its year-to-date ordinary earnings to derive its income tax provision each quarter. To calculate its AETR, an entity must estimate its ordinary income or loss and the related tax expense or benefit for its full fiscal year. In situations in which an entity is in a loss position and recognizes a full valuation allowance, the guidance in ASC 740-270-25-9 applies. Due to continued historical domestic losses and uncertain future domestic earnings, the Company continues to recognize a full domestic valuation allowance.

Permanent differences continue to fluctuate and are significant compared to projected ordinary income. Therefore, per ASC guidance, the fully valued domestic entity was removed from the annualized effective rate calculation. Because of the full U.S. valuation allowance, the U.S. entity may only recognize tax expense (benefit) recorded for ASC 740-10 adjustments.

 

  

For the Quarter-Ended

  

For the Three Quarters Ended

 
  

March 28, 2025

  

March 29, 2024

  

March 28, 2025

  

March 29, 2024

 

Foreign earnings, before income taxes of $1,140, $400, $3,546, and $2,599, respectively

 $5,054  $6,010  $14,154  $14,915 

Domestic losses, before income taxes of $0, ($2), $(227) and $7, respetively

  (5,334)  (1,712)  (13,928)  (8,557)

(Loss) income before income taxes and noncontrolling interest

 $(280) $4,298  $226  $6,358 
                 

Income tax expense

 $1,142  $398  $3,320  $2,606 

Effective income tax rate

  -407.9%  9.3%  1469.0%  41.0%

 

Due to the full US valuation allowance currently in place, no tax benefit can be recognized on the domestic losses.